Jobs Data Give Green Light to Risk-on Trade

Talk about a green light situation, leading up to last Friday’s release of the February employment data, the investing landscape had three forces acting as potential headwinds to an otherwise secular bullish trend — increasing interest rates, rising inflation and global trade tariffs.

Regardless of all other headlines that might cross the tape, these three were the top concerns by market participants because they have wide-reaching effects on financial markets, unlike many other potential disruptive forces. The combined impact of these perceived headwinds caused the market to swoon, stopping the recovery we saw from early February’s large sell-off.

The possibility of a trade war has investors tuned into possible global retaliation to the U.S. tariffs and its implication on and from North American Free Trade Agreement (NAFTA) partners. In the past, periods of protectionism, where government policies and actions restrict international trade with the intent of protecting domestic business as Trump suggested, have not been great for investors.